Zurich Insurance entity reports €348m loss

The Dublin-based entity that underwrites non-life risk for Zurich Insurance in 13 EU countries slipped into the red last year.

It recorded a pre-tax loss of €348 million, due largely to weather-related underwriting losses and a sharp decline in investment returns. This compared with a profit of €749 million in 2014 recorded by Zurich Insurance plc, according to accounts just filed with the companies office.

In spite of making a loss, the company paid a dividend of €320 million to its Swiss parent company, down from €470 million in the previous year. The dividend per share amounted to €49 in 2015, down from €72 in the previous financial period.

The company, led by Irishman Patrick Manley, is the main underwriter for Zurich's EU non-life business and is authorised to operate through a network of branches outside the Republic. These are located in Belgium, Germany, Spain, Italy, Portugal, Norway, Sweden, Denmark, Finland, France, the Netherlands, and the UK.

Zurich’s latest financial statements indicate it made a loss of €13 million in Ireland last year, compared with an €8 million deficit recorded in 2014.

Its gross premiums earned in Ireland were €272 million while its gloss claims were €204 million. It operating expenses amounted to €77 million with reinsurance costs of €12 million, while other technical income came to €8 million.

The accounts show that Zurich’s gross written premium income across all of the 13 markets last year rose by 2.5 per cent to €8.9 billion. The loss ratio increased to 79.4 per cent from 70.6 per cent in 2014.

Its earned premium, net of reinsurance, increased by 3 per cent to €3.5 billion. Other income brought its total technical income to €3.8 billion.

In terms of gross premiums earned, the UK was Zurich’s biggest market at €3.5 billion, followed by Germany at just under €2 billion. Both of those units recorded losses with Italy the only major market to show a surplus.

In terms of costs, claims incurred, net of reinsurance, amounted to just under €2.8 billion, a rise of 16 per cent on 2014. Its net operating expenses came to just more than €1.1 billion to bring its total technical costs to €3.9 billion.

Charges relating to its non-technical account resulted in it posting a pre-tax loss of €348 million.

Its underwriting loss was €396 million worse than the previous year, which the accounts state was “mainly due to unfavourable weather, catastrophe and large loss experience relative to 2014”.

It generated investment returns of €211 million in 2015, compared with €796 million in the previous 12-month period. This included €327 million of investment income and €161 million of unrealised losses due to bond yield increases.

Investment income last year of €327 million was “marginally below” the figure for 2014 due to reduced yields.

Zurich’s accounts show that at the year end, it had a Solvency I capital ratio of 180.3 per cent, which was comfortably above the 150 per cent ratio required by the Central Bank of Ireland. It had assets available to cover its solvency margin of €1.5 billion.

Zurich Insurance plc employed an average 2,899 people last year, down from 2,923 in 2014. In spite of the headcount reduction, staff costs rose by 5 per cent to €247 million.

Directors remuneration amounted to €3 million last year, the same level as in 2014. Mr Manley and chief financial officer Fredrik Solberg were the company's two executive directors during the period.

No comment on the accounts was available from Zurich.